Distressed Multifamily Investing with Ivan Barratt

Distressed multifamily investing is creating opportunities for real estate investors as rising interest rates, refinancing challenges, and increased operating expenses put pressure on apartment owners. While many investors are struggling to protect their existing portfolios, experienced operators are identifying opportunities to acquire multifamily properties at significant discounts. Understanding how to evaluate distressed assets, navigate market cycles, and structure investments can help investors capitalize on changing real estate conditions.

In this episode of Lifetime Cash Flow Through Real Estate Investing, Rod Khleif sits down with Ivan Barratt to discuss distressed multifamily investing, the challenges facing apartment operators, and the strategies his company is using to acquire properties below replacement cost. With experience across nearly 11,000 apartment units, Ivan shares insights into identifying motivated sellers, managing investment risk, and positioning a multifamily portfolio for long-term growth.

Why Distressed Multifamily Investing Is Creating Opportunities

The multifamily real estate market has experienced significant challenges as higher borrowing costs, rising insurance premiums, increasing labor expenses, and an influx of new apartment construction have affected property performance. Many operators who purchased properties during periods of historically low interest rates are now struggling to refinance their loans or maintain projected investment returns. These conditions are forcing some property owners to sell assets at prices significantly below their original investment costs.

Ivan Barratt explains that distressed multifamily investing becomes particularly attractive when developers and property owners face financial pressure that limits their ability to hold properties. He describes a newly constructed apartment community in the Southeast that his company was pursuing for approximately 78% of its construction cost. Although the property was approximately 75% occupied and continuing to lease units, the developer faced refinancing challenges that created an opportunity for a buyer with available capital.

Rather than relying on predictions about when the real estate market will reach its lowest point, Ivan emphasizes purchasing properties at valuations that make financial sense. His approach focuses on disciplined underwriting, attractive acquisition prices, and the ability to hold investments through changing market conditions. For investors with sufficient capital and a long-term perspective, distressed multifamily acquisitions may provide opportunities that were difficult to find during more competitive market cycles.

How Interest Rates and Refinancing Challenges Impact Multifamily Properties

One of the biggest challenges facing multifamily investors is the growing volume of commercial real estate debt approaching maturity. Many apartment owners financed acquisitions using loans that eventually require refinancing or repayment. When interest rates rise and property income fails to meet lender requirements, refinancing can become significantly more difficult.

Ivan explains that some property owners are being forced to contribute additional capital to refinance their existing debt. Developers who cannot provide that capital may have little choice but to sell their properties, even when doing so means losing much of their original equity investment. These situations can create distressed multifamily investing opportunities for buyers who have access to financing and can move quickly.

Several factors are contributing to financial pressure across the multifamily market:

• Higher interest rates: Increased borrowing costs make refinancing more expensive and can reduce property valuations.

• New apartment supply: Additional construction creates competition for tenants and limits rental growth in certain markets.

• Rising operating expenses: Insurance, property taxes, maintenance, and labor costs reduce net operating income.

• Debt maturities: Expiring loans can force owners to refinance, contribute additional equity, or sell.

• Limited rental growth: Flat or declining rents make it harder for operators to increase property income and improve financial performance.

Ivan stresses that investors must evaluate these conditions carefully rather than assuming every discounted property represents a good investment. Understanding debt structures, property fundamentals, and local market conditions is essential when pursuing distressed multifamily assets.

Finding Distressed Multifamily Deals Below Replacement Cost

One of the most valuable insights Ivan shares is the importance of comparing acquisition prices with replacement costs. Replacement cost represents the estimated expense of constructing a comparable property, including the costs associated with development. Acquiring an existing apartment community below replacement cost can create an attractive investment opportunity, particularly when the property is relatively new and located in a market with strong long-term demand.

Ivan discusses expanding his company’s acquisition activity into North Carolina and South Carolina, where distressed opportunities have become more available. His team has identified situations involving developers who completed construction but cannot secure favorable refinancing terms. In certain cases, properties are being offered at prices close to their outstanding debt balances, leaving the original equity investors with substantial losses.

The strategy requires patience and the willingness to walk away from transactions that do not meet investment criteria. Ivan describes situations where sellers initially accepted higher offers from competing buyers, only to return after those transactions failed. By maintaining disciplined pricing and avoiding emotional bidding, his company aims to acquire properties at valuations that provide a stronger margin of safety.

Why Local Market Analysis Matters in Distressed Multifamily Investing

Not every multifamily market experiences the same economic conditions or investment opportunities. Ivan explains that Midwest apartment markets have generally experienced less dramatic fluctuations than some faster-growing markets. While this stability can help protect existing investments, it can also mean fewer deeply discounted acquisition opportunities.

His company has historically invested across the Midwest, including Indiana, Iowa, Kansas, Missouri, Pennsylvania, and Arkansas. However, the current pricing environment has encouraged expansion into the Carolinas, where certain properties are experiencing greater financial pressure. Ivan believes investors should evaluate individual markets based on their fundamentals rather than assuming national real estate trends apply equally everywhere.

Important factors to consider when evaluating a distressed multifamily market include population growth, employment trends, apartment construction activity, occupancy levels, and rental demand. Ivan also emphasizes the importance of understanding local development pipelines and identifying markets where new construction is beginning to slow. These indicators can help investors determine whether a discounted acquisition has the potential to benefit from improving market conditions over time.

Preferred Equity and Multifamily Real Estate Debt Investing

Beyond traditional apartment acquisitions, Ivan Barratt discusses how his company is expanding into real estate credit investing. Through an evergreen credit fund, his team purchases higher-yielding debt and provides preferred equity financing to real estate developers and property owners. This strategy allows investors to participate in real estate financing while pursuing a different risk and return profile from traditional multifamily ownership.

Preferred equity generally occupies a position between senior debt and common equity in a property’s capital structure. Depending on the investment agreement, preferred equity investors may receive scheduled payments and additional returns when a property is refinanced or sold. These investments can offer greater payment priority than common equity, although they remain exposed to potential losses if a property performs poorly or its value declines significantly.

Ivan explains that his company’s credit strategy relies on the same underwriting and operational knowledge developed through years of multifamily ownership. The team evaluates collateral quality, borrower experience, and the underlying property’s ability to support its financial obligations. For investors interested in income generation and capital preservation, understanding the differences between preferred equity, senior debt, and common equity can be an important part of evaluating real estate investment opportunities.

Building a Multifamily Investment Business That Can Survive Market Cycles

Ivan’s experience demonstrates that successful multifamily investing involves much more than acquiring properties. His company operates with dedicated leadership, investment management, investor relations, property management, and project management teams. This organizational structure allows the business to oversee a large portfolio while continuing to evaluate acquisitions and communicate with investors.

He also discusses the importance of controlling operating expenses during difficult market conditions. His property management operation has focused on repairing equipment and appliances when economically practical rather than automatically replacing them. Specialized maintenance personnel, internal project oversight, and property tax appeals are among the strategies his company uses to manage expenses and protect property income.

Another important lesson involves transparency with investors. Ivan acknowledges that some acquisitions completed during 2022, 2023, and early 2024 have faced significant challenges due to changing market conditions. Rather than maintaining unrealistic return expectations, he emphasizes communicating openly with investors and prioritizing the recovery of invested capital when necessary.

For multifamily operators, several principles emerge from his experience:

• Maintain conservative underwriting and avoid overpaying for properties.

• Build sufficient financial reserves to withstand unexpected challenges.

• Focus on operational efficiency and expense management.

• Communicate transparently with investors about performance and risk.

• Remain disciplined when evaluating acquisitions during market corrections.

These practices are especially important in distressed multifamily investing, where attractive purchase prices must be balanced against financing risks, property performance, and uncertain market conditions.

About Ivan Barratt

Ivan Barratt is a real estate investor, entrepreneur, and founder of BAM Capital, a multifamily investment company he started in 2010. After beginning his career in property management and acquiring smaller apartment properties, he expanded into larger multifamily syndications and built a business involved in nearly 11,000 apartment units, including development and joint venture investments. His company works with approximately 2,000 investors and focuses on multifamily acquisitions, property operations, development, and real estate credit strategies. Ivan brings extensive experience navigating real estate market cycles, building investment teams, and identifying opportunities in distressed multifamily properties.

Learn More About Distressed Multifamily Investing

Distressed multifamily investing requires a combination of market knowledge, financial discipline, operational experience, and the ability to recognize opportunities when other investors are facing uncertainty. Ivan Barratt’s experience highlights how refinancing challenges, changing property valuations, and market-specific conditions can create attractive acquisition opportunities for well-prepared investors. His insights also demonstrate why protecting investor capital, maintaining strong operations, and understanding real estate financing structures remain essential throughout every stage of the investment cycle.

If you want to hear Ivan Barratt’s full conversation with Rod Khleif and learn more about distressed multifamily investing, acquiring apartment properties below replacement cost, and navigating today’s multifamily market, watch the podcast video or read the complete transcript below.

Distressed Multifamily Investing FAQ

What Is Distressed Multifamily Investing?

Distressed multifamily investing involves purchasing apartment buildings or multifamily properties experiencing financial difficulties, operational challenges, or pressure to sell. These properties may become available at discounted prices because owners cannot refinance existing loans, manage rising expenses, or maintain sufficient cash flow. Ivan Barratt explains that distressed multifamily investing can create opportunities to acquire apartment communities below their original construction costs. Investors who understand market cycles and property fundamentals may be able to capitalize on these opportunities while pursuing long-term investment returns.

Why Are Distressed Multifamily Properties Becoming Available?

Distressed multifamily properties are becoming available because higher interest rates, increasing operating expenses, and slowing rental growth have created financial pressure for apartment owners. Many investors who purchased properties during periods of low interest rates are now struggling to refinance their debt or meet lender requirements. Ivan Barratt discusses how some developers are being forced to sell newly constructed apartment communities because they cannot contribute the additional capital required to refinance. These conditions can create opportunities for buyers with available capital and disciplined acquisition strategies.

How Do Investors Find Distressed Multifamily Deals?

Investors can find distressed multifamily deals by building relationships with property owners, developers, commercial real estate brokers, lenders, and other industry professionals. Ivan Barratt emphasizes the importance of maintaining relationships with real estate operators and identifying sellers facing refinancing challenges or financial pressure. His company has pursued opportunities in North Carolina and South Carolina, where some developers have been forced to sell properties at significant discounts. Successful distressed multifamily investing requires consistent deal sourcing, thorough underwriting, and patience when negotiating acquisition prices.

What Are the Benefits of Buying Multifamily Properties Below Replacement Cost?

Buying multifamily properties below replacement cost allows investors to acquire existing apartment communities for less than the estimated expense of constructing comparable properties. This can provide an attractive entry point, particularly when acquiring newer properties in markets with strong population and employment growth. Ivan Barratt describes pursuing a newly constructed apartment property at approximately 78% of its construction cost because the developer faced refinancing difficulties. Although purchasing below replacement cost does not guarantee profitability, it can provide a potential valuation advantage when supported by strong property fundamentals.

How Do Interest Rates Affect Distressed Multifamily Investing?

Interest rates significantly influence multifamily property valuations, financing costs, and investment profitability. When interest rates increase, apartment owners may experience higher debt payments and difficulty refinancing existing loans. Ivan Barratt explains that some multifamily developers cannot meet refinancing requirements without contributing millions of dollars in additional equity. These financial challenges can force property sales and create distressed multifamily investing opportunities for buyers with sufficient capital and access to financing.

What Are the Biggest Risks of Distressed Multifamily Investing?

Distressed multifamily investing involves risks related to financing, property operations, occupancy, rental income, and changing market conditions. Properties may be discounted because of serious financial or operational problems that require additional capital to resolve. Ivan Barratt highlights how rising insurance costs, maintenance expenses, labor costs, and increased apartment supply can reduce property profitability. Investors must carefully evaluate the property’s financial performance, debt obligations, renovation requirements, and local rental market before completing an acquisition.

How Does Multifamily Market Analysis Help Investors Identify Distressed Properties?

Multifamily market analysis helps investors evaluate whether a distressed apartment property has the potential to generate sustainable income and appreciate over time. Important factors include population growth, employment trends, rental demand, occupancy rates, and new apartment construction. Ivan Barratt explains that different markets experience real estate cycles differently, with some Midwest markets showing greater stability while certain Southeast markets offer larger acquisition discounts. Understanding these differences helps investors identify opportunities that align with their investment strategies and risk tolerance.

What Is the Difference Between Distressed Multifamily Investing and Traditional Multifamily Investing?

Traditional multifamily investing generally involves purchasing apartment properties based on their existing income, appreciation potential, and opportunities for operational improvements. Distressed multifamily investing specifically targets properties experiencing financial pressure, ownership challenges, or circumstances that may motivate sellers to accept discounted prices. Ivan Barratt focuses on acquiring properties from developers and operators who face refinancing difficulties or cannot continue holding their assets. While both strategies require careful underwriting and property management, distressed acquisitions often involve greater financial complexity and opportunities to negotiate favorable purchase prices.

How Can Investors Finance Distressed Multifamily Acquisitions?

Investors can finance distressed multifamily acquisitions through commercial real estate loans, private capital, investment partnerships, and multifamily syndications. Financing availability depends on the property’s financial performance, occupancy, valuation, and the borrower’s qualifications. Ivan Barratt discusses the importance of having access to capital when distressed sellers need to complete transactions under financial pressure. Investors should evaluate loan terms, debt service coverage requirements, and available reserves to ensure an acquisition can withstand potential market challenges.

Why Is Conservative Underwriting Important in Distressed Multifamily Investing?

Conservative underwriting helps investors determine whether a distressed multifamily property can generate sufficient income to cover operating expenses, financing costs, and potential unexpected expenditures. It involves evaluating realistic rental income, occupancy assumptions, maintenance costs, insurance expenses, and future capital requirements. Ivan Barratt emphasizes maintaining acquisition discipline and refusing to overpay for properties, even when competing buyers submit higher offers. Conservative financial projections can help investors avoid purchasing properties that appear discounted but still carry significant financial risks.

Can Distressed Multifamily Investing Generate Long-Term Wealth?

Distressed multifamily investing can contribute to long-term wealth creation when investors acquire properties at favorable valuations and successfully improve their financial performance. Potential returns may come from rental income, property appreciation, operational improvements, and increased occupancy. Ivan Barratt discusses purchasing discounted multifamily properties with an investment holding period of approximately three to seven years, allowing time for market conditions and property performance to improve. However, investment success depends on acquisition pricing, financing structures, effective management, and the ability to withstand changing economic conditions.

What Can Real Estate Investors Learn From Ivan Barratt About Distressed Multifamily Investing?

Ivan Barratt emphasizes that successful distressed multifamily investing requires patience, disciplined underwriting, strong relationships, and an understanding of real estate market cycles. His experience across nearly 11,000 apartment units demonstrates the importance of building capable teams, controlling operating expenses, and maintaining transparent communication with investors. He also highlights opportunities to acquire newly constructed multifamily properties below replacement cost when developers face refinancing challenges. His approach reinforces the importance of protecting investor capital while remaining prepared to act when attractive distressed multifamily investment opportunities emerge.

00:00:32:27 – 00:00:50:07
Rod Khlief
Welcome back to lifetime cash flow through real estate investing. I’m Rod Khleif and I’m thrilled you’re here. And I’m even more thrilled at the guest I’m interviewing today. He is a very good old friend that God used to. Were you in my mastermind or just the panels? Were you just on the panels? I don’t remember. Did you ever come to my master?

00:00:50:07 – 00:00:51:23
Ivan Barratt
Just came on some. Some panels.

00:00:52:00 – 00:00:52:10
Rod Khlief
From my.

00:00:52:10 – 00:00:53:11
Ivan Barratt
Boot camp friends. Yeah.

00:00:53:11 – 00:01:11:01
Rod Khlief
Yeah, yeah. Beck, you know, I didn’t have warriors back then to do my panels on my boot camp, so I brought in experts that I interviewed on my show, and Ivan Bear, it is here. And he’s a freaking rock star. Flew, flew down on his jet and which is just cool as shit to me to say that I had to.

00:01:11:02 – 00:01:29:28
Rod Khlief
Yeah, I couldn’t help myself. And then, you know, he’s been in like almost 11,000 units, thousand of them. He built, and he’s gearing up to take advantage of where we are in the market right now. So this is going to be a very interesting conversation. Buckle up. Welcome brother. So good to see you man. Good to be here.

00:01:29:29 – 00:01:46:25
Rod Khlief
Likewise in living in the flesh person. Yeah. So you’ve got tons of stuff going on, but why don’t we. Why don’t you give us background? Because you were on my show way back. Right back in. Like, I think this might be our third episode. Is it okay? Well, there you go. I mean, it’s been a long time.

00:01:46:25 – 00:02:06:12
Rod Khlief
Forgot what I had for breakfast already, and. But I know that, it was a long time ago that that you were on. And so, you know, let’s pretend you haven’t been on and just give people your give it, give it, you know, let us know who you are. Yeah. Sure. Again. Ivan Barrett. Own a little company called bam that started in 2010.

00:02:06:13 – 00:02:33:08
Rod Khlief
In my spare bedroom, I began managing properties. I just written the highs of the GFC and then everything falls off a cliff. I am scratching and clawing to stay in real estate, at one point even delivering pizzas a town away. Wow. Where I hoped nobody would recognize me. Wow. Just to get cash coming in the door, wife and I moved into a girlfriend at the time, who’s now my wife.

00:02:33:08 – 00:02:55:11
Rod Khlief
Thankfully, she stuck. Stuck with me. Amazing. The charity of women has never cease to amaze me. But, yeah, she’s. She’s been the best partner. Second best partner is my business partner. But, Yeah. Started management company in my spare bedroom so that I could grow a service based business, get cash flow coming in, started doing my own small deals with hard money, and then really laid it brick by brick from there.

00:02:55:11 – 00:03:22:14
Rod Khlief
We don’t manage anything for anybody else today. We did that for quite a while. That’s a thankless business. It is, but it allowed me to build a team. It allowed me to get cash flow coming in, see what to do, what not to do. Well, you know how it is. It would take me six months to find a bird multifamily deal where I could renovate a distressed property, and I could usually in 1 or 2 meetings, sell somebody on the idea of me managing their tenants and toilets.

00:03:22:17 – 00:03:25:18
Rod Khlief
Yeah. The thing with the property management company, for those of you who are thinking.

00:03:25:18 – 00:03:30:12
Rod Khleif
Hey, I’m going to get into property management, just remember, they don’t call you when they’re happy tenants or owners.

00:03:30:12 – 00:03:30:21
Rod Khlief
If you’re.

00:03:30:21 – 00:03:34:00
Rod Khleif
Doing third party property management, they only call when they’re not on anyway.

00:03:34:02 – 00:03:54:02
Rod Khlief
There is very, very tough business. But that was the gantlet of fire for me, and that those early management clients became some of my first investors in my first syndication deal. Oh, wow. I’d already done 15, 30, 35 with one partner at an operating agreement. And then, I guess I’m sorry.

00:03:54:03 – 00:03:57:07
Rod Khleif
Could you elaborate on what you just. What do you mean, 1530 and 30.

00:03:57:08 – 00:04:23:25
Rod Khlief
Five, 15 units that I got. You got to the size of the assets. 30. 35. Then I bought a 30. My first actual syndication with a PM was 60 units. Well, and then today, we’re we’re approaching 11,000 apartments, right? About ten 000 built on a thousand in development, joint ventures, almost 2000 investors now across almost every state in the union.

00:04:23:27 – 00:04:28:20
Rod Khlief
Yeah. And it’s been it’s been a wild ride. Yeah, it’s been a wild ride, man.

00:04:28:22 – 00:04:46:10
Rod Khleif
Well, that’s the understatement of the freaking year where we are right now. We were talking about a little before we started recording, just the, you know, the pain that every operator, including Ivan and myself, are dealing with in this, in this current economic environment. And did they fed meat yet? I’m sure they’re going to hold steady. They say they’re going to hold steady.

00:04:46:11 – 00:04:47:19
Rod Khleif
Are they meeting today?

00:04:47:22 – 00:04:51:13
Rod Khlief
Later today we should get the official pause, right.

00:04:51:13 – 00:04:52:21
Rod Khleif
That they didn’t do nothing. Right?

00:04:52:24 – 00:05:10:27
Rod Khlief
Yeah. Cal, all the the betting stuff says that they’re they’re going to hold. And given what the what the treasuries have done the last few weeks and the the uncertainty in some of the areas of the market, private credit, semiconductors, I think they’re going to hold and, and

00:05:11:00 – 00:05:12:14
Rod Khleif
Yeah, these, these.

00:05:12:16 – 00:05:13:26
Rod Khlief
Interesting history, those.

00:05:13:26 – 00:05:32:25
Rod Khleif
Facilities that are being built are, I’m sorry, I digress. These AI yeah. What do they call them now? What what data centers? Thank you, thank you. There’s a lot of we can have a lot of fun with that conversation, but. But anyway, Yeah. In fact, back to the Fed reserve for a minute. Because you’re a really sharp guy.

00:05:32:27 – 00:05:51:15
Rod Khleif
Do you think the new chairman is looking for ways to more accurately portray inflation and job growth, loss, whatever? Because I, I, I saw an article that they thought that’s what he was looking for because, you know, he’s a Trump appointee and Trump wants the rates to come down.

00:05:51:18 – 00:06:11:13
Rod Khlief
If I put on my tinfoil hat. Right please. I think the fed knows they screwed up by saying we want to target 2% inflation per year. Right. And a growing economy three is probably a better number, right? They can’t just come out and say that, you know, too many people understand inflation now that it’s a silent tax. Right.

00:06:11:15 – 00:06:48:03
Rod Khlief
If I put my ten foil hat on rod, I think that they wish they hadn’t said 2%. Inflation is our mandate. I think they’d rather be around three. Right. And I think somehow they’re going to finally get a way to get there without just outright saying it. But if you look back at fed history, if he’s one and done on a hike, he would be, I think the like the fourth fed chair in a row or three out of four that came in, did one hike to kind of, you know, show their their independence and then ended up walking that back when the crisis.

00:06:48:07 – 00:06:48:17
Rod Khlief
Kidding.

00:06:48:18 – 00:06:50:23
Rod Khleif
Oh, so he did a little analysis. Well that’s good.

00:06:50:24 – 00:06:51:18
Rod Khlief
Greenspan.

00:06:51:19 – 00:06:55:01
Rod Khleif
Yellen they all did it. Okay interesting. Yeah okay.

00:06:55:06 – 00:06:58:13
Rod Khlief
So we’ll see. But we have to plan for potentially more hikes right.

00:06:58:14 – 00:06:58:23
Rod Khleif
Oh I know.

00:06:58:23 – 00:06:59:00
Rod Khlief
We have.

00:06:59:00 – 00:07:17:16
Rod Khleif
To plan for I know. And it’s it’s and that’s what’s causing the pain. I mean one of the the the you know we were talking about the wall of debt coming due and how you’ve heard different numbers. I’ve heard as much as a trillion. I’ve heard a half a trillion in multifamily alone. But you know, who knows what the real numbers are, but they’re big and huge.

00:07:17:17 – 00:07:39:29
Rod Khlief
If we’re if we’re including all asset classes. Right. And just global debt. Yeah. It’s all about the role, Michael, how, I forget the name of this podcast, but it’s all about global liquidity. There’s a lot of money that has to roll every year. Trillions. Right. And if it can’t roll, that’s when the system starts jamming up.

00:07:40:00 – 00:08:00:21
Rod Khleif
Interesting. Yeah. Yeah, it’s it’s going to be interesting to see how it all shakes out, but, I know it’s it’s massively affecting our business because this wall of debt, they have two options. Sell or refinance sales aren’t, aren’t, aren’t killing it right now. Way down. And refinancing is damn near impossible because you can’t meet debt service coverage requirements.

00:08:00:21 – 00:08:05:02
Rod Khleif
So people people don’t have millions to put into these deals to get the debt they need.

00:08:05:03 – 00:08:28:12
Rod Khlief
Oh, no. We’re doing one right now in the southeast. Literally just finished building it. It’s maybe 75% occupied and rising. Brand new construction and the developers being forced to sell it. Why? Because he can’t he can’t do a cash and refi. He doesn’t have the millions of dollars to cash in. So it’s being sold at whatever the market clears it.

00:08:28:12 – 00:08:34:10
Rod Khlief
At which right now that one’s looking like about maybe $0.78 on the dollar from construction costs. Wow.

00:08:34:13 – 00:08:38:09
Rod Khleif
Wow. Some construction costs. So you’re buying it for less than construction costs?

00:08:38:11 – 00:08:44:18
Rod Khlief
Yeah, we’re buying it for about the debt. Wow. And the bank’s going to get paid back. The equity is not. Well, that’s.

00:08:44:21 – 00:08:46:22
Rod Khleif
What city are you in? Where are you at? Oh.

00:08:46:22 – 00:08:48:10
Rod Khlief
You can’t say no, I can’t.

00:08:48:10 – 00:08:49:13
Rod Khleif
Say I thought you already. Oh.

00:08:49:18 – 00:08:50:01
Rod Khlief
You can’t.

00:08:50:01 – 00:08:50:21
Rod Khleif
Say you haven’t.

00:08:50:25 – 00:09:03:13
Rod Khlief
Locked up. I will say that we are entering the southeast. Okay. We’ll buy about a thousand units. We’ve closed on the first few hundred. What state? We’re in the Carolinas, North and South Carolina. Love looking along the coast.

00:09:03:14 – 00:09:05:06
Rod Khleif
Carolinas are great. I’ve had.

00:09:05:08 – 00:09:25:08
Rod Khlief
Both been looking at the southeast for years. Could never find a deal. Now the deals are starting to pop up. Yeah, I’m on the phone with 8 to 10 CEOs every week. Anyone who can afford to hold this holding right now, only those that are getting forced to sell are selling. But there are more coming for sure.

00:09:25:09 – 00:09:32:12
Rod Khleif
Oh, for they have to. You know, the catch phrase for lenders was extend and pretend. And I’m telling you, I think that ship has sailed.

00:09:32:15 – 00:09:39:20
Rod Khlief
Extend and pretend is starting to fade, right? Certain lenders are becoming loan to own where they’re just going to take the property.

00:09:39:21 – 00:09:40:12
Rod Khleif
Yeah, yeah.

00:09:40:13 – 00:09:50:18
Rod Khlief
And, this is this is a real estate cycle. Maybe long overdue. But when you match that kind of acceleration and rise and rates with a supply wave.

00:09:50:21 – 00:09:51:04
Rod Khleif
Yeah.

00:09:51:07 – 00:09:52:20
Rod Khlief
There’s going to be some blood in the streets.

00:09:52:21 – 00:10:09:16
Rod Khleif
Oh, yeah. No, there already is a, you know, my SEC. Attorney. Oh, gosh. Probably three months ago told me in one day he got six apartment complex foreclosures. Wow. Because he does work out some stuff. Yeah, but, Yeah. No. So there’s a lot of blood in the streets, but, you know, so we’re scared the shit out of you.

00:10:09:17 – 00:10:29:24
Rod Khleif
Those. Are you listening? But if you’ve heard me talk about this, with crisis comes opportunity. Period. Okay. You know Warren Buffett’s famous quote, be fearful when others are greedy. A lot of greed the last few years. But the flip side of that is be greedy when others are fearful. And now the fear is there. You know, I’m seeing in my coaching business, people are afraid to invest in themselves to to learn this business.

00:10:29:24 – 00:10:34:09
Rod Khleif
But if there was ever a freaking time, it’s right now to learn this business. Hello!

00:10:34:11 – 00:10:45:06
Rod Khlief
Great time to jump in. Great time to jump in during a during a crisis. Absolutely. Yeah. This never it’s never easy. Scary. Scary work. Yeah. I’m even a little scared. Yeah, yeah.

00:10:45:09 – 00:10:45:28
Rod Khleif
It’s gonna go.

00:10:46:03 – 00:10:50:21
Rod Khlief
What was Greenspan’s famous quote was irrational exuberance, Well.

00:10:50:23 – 00:10:57:17
Rod Khleif
I liked that, by the way. And that’s what it was. That’s what it was in 2006 and seven. I saw it and I saw it in 21, 22.

00:10:57:19 – 00:10:58:04
Rod Khlief
And now.

00:10:58:05 – 00:10:59:05
Rod Khleif
In 2013.

00:10:59:06 – 00:11:22:28
Rod Khlief
And think about it in eight, nine, ten and similar today we had this irrational pessimism. Right. People thought it was going to get worse. I liked that it was going to go down even more that hey who knows the economy might collapse completely, right. People had irrational pessimism right. AI AI is exasperating. That irrational pessimism I got on this TikTok algorithm and shoot.

00:11:23:00 – 00:11:42:01
Rod Khlief
Very sobering around around. You know how we met. Aren’t we supposed to keep him in the on the rails here with his TikTok? Yeah, yeah, I try to. Dude, I used to I used to read a book a day when I went on vacation. I get sucked into TikTok for a few hours. Yeah, because I just came back from a three week vacation and good lord.

00:11:42:01 – 00:12:04:20
Rod Khlief
But you know, what are your thoughts on AI and and are you how are you utilizing it in your, you know, your operations so far? It’s changing every aspect of our business. And what I like about it is that it makes my best humans superhuman. Exactly, exactly. My analysts, my asset managers rights. Even even our our sales team.

00:12:04:21 – 00:12:27:18
Rod Khlief
Yeah. We’re we’re usually pretty slow to adopt things because we want to kind of see how it plays out a little bit, but there’s just so many areas where it’s improving the business. ITI had for it people. Well, two in the Philippines and two two stateside. I’m down to just two people, one here and one in the Philippines.

00:12:27:19 – 00:12:49:17
Rod Khlief
Yeah. So certain areas where we don’t need as many people because the, the best person is now a super human. Yeah. No question. You know, my my daughter works for me, and and I almost had to let her go. I’ve cut her way back. She’s Mensa, by the way. She’s a brilliant, brilliant girl. And, and so, you know, you know, I told you, I’m getting into senior housing.

00:12:49:19 – 00:13:13:21
Rod Khlief
Yeah. So I’m helping her look at home health care businesses. I may help her set one of those up in in, you know, Texas, where we had most of our facilities. But, you know, it’s it’s painful when it’s your own family, too, because she was doing seo and and and, marketing and, my God, you know, we we use open claw and and Matt is a master at this stuff, and she’s just not needed for that stuff anymore.

00:13:13:23 – 00:13:32:16
Rod Khlief
It’s all it’s all it’s it’s changing. They’ve even cloned me. By the way, I have to show you, once we go offline here and show you my clone, you can’t tell it’s me. I’m just telling you it’s really good. But, Anyway. So. So, Yeah. Crystal ball. So you’re going to you’re going to try to get a thousand units here in the next short while.

00:13:32:18 – 00:13:42:05
Ivan Barratt
Depending on how the last couple shake out, because we’re being very selective right now. And we like I was telling you before we got on the air, our new nickname where we’re buying is shark.

00:13:42:06 – 00:13:43:15
Rod Khlief
Shark. Yeah. Yeah. Good.

00:13:43:17 – 00:14:01:11
Ivan Barratt
Because it’s it’s that part of the cycle we’re in. Oh yeah. And so if we can’t get it for the price we want, we’ll sit back and wait. And we’ve already had a couple potential acquisitions where they said, hey, we’re going to sell it to this other group for a couple million bucks more. That other group is blown out and then they’re coming back to us.

00:14:01:15 – 00:14:02:24
Ivan Barratt
And hey is your price still.

00:14:02:26 – 00:14:05:18
Rod Khlief
Oh yeah. That’s very common. Still valid. Yeah yeah.

00:14:05:26 – 00:14:10:19
Ivan Barratt
And then on the other side of the coin, you know, it’s it’s a knife fight managing the the portfolio.

00:14:10:21 – 00:14:14:14
Rod Khlief
Yeah. So you’ve got assets in seven states. What states, by the way?

00:14:14:16 – 00:14:25:02
Ivan Barratt
We’re all across the Midwest, from Pennsylvania to Iowa, Kansas, Kansas City on the Missouri side, a lot in Indiana and secondary tertiary markets.

00:14:25:03 – 00:14:26:06
Rod Khlief
Based in Indiana. Right?

00:14:26:07 – 00:14:29:01
Ivan Barratt
Yeah, yeah. Northwest Arkansas.

00:14:29:03 – 00:14:34:15
Rod Khlief
Oh, I like northwest Arkansas. Oh, I was looking at a place in Holly.

00:14:34:17 – 00:14:38:16
Ivan Barratt
We were in Bentonville, Rogers, and then Fayetteville.

00:14:38:19 – 00:14:39:18
Rod Khlief
Down Holly Springs.

00:14:39:26 – 00:14:42:21
Ivan Barratt
We’re up in the headquarters where Walmart is.

00:14:42:23 – 00:14:52:03
Rod Khlief
Walmart. Yeah. Yeah, yeah, yeah. Well, I almost got a place in. I thought it was Holly Springs Northwest. I could be wrong. Was that, you know, that was. It was beautiful little resort town.

00:14:52:05 – 00:14:53:14
Ivan Barratt
And now the Carolinas.

00:14:53:22 – 00:15:07:18
Rod Khlief
And the Carolinas. Yeah. I love the Carolinas. Yeah. Wow. Well, And and now the growth is southeast. Are you going to continue to look for this kind of stuff in your backyard as well? You’re going to or you just focused on southeast right now.

00:15:07:19 – 00:15:12:18
Ivan Barratt
Every markets a little different in in they all go through their own little sort of local.

00:15:12:21 – 00:15:14:21
Rod Khlief
The Midwest doesn’t go up and down that hard.

00:15:14:22 – 00:15:26:13
Ivan Barratt
It doesn’t it doesn’t boom and it doesn’t bust, but it still goes through a little bit of a cycle, okay. Where we’re just not seeing the the types of discounts in the Midwest that we’re finding in the Carolinas right now.

00:15:26:15 – 00:15:28:05
Rod Khlief
You don’t like Texas.

00:15:28:07 – 00:15:31:23
Ivan Barratt
You know, it’s just not been in my core competency. I know there’s a lot of competition down there.

00:15:31:24 – 00:15:32:04
Rod Khlief
There is.

00:15:32:05 – 00:15:39:25
Ivan Barratt
Yeah, Texas was an area that really felt it after this crisis, you know. But I love Texas in general.

00:15:39:26 – 00:15:54:22
Rod Khlief
Yeah. I was telling you about a 296 unit asset we’ve got in San Antonio with 3% debt. And we’re struggling because it was a race to the bottom with rents. You know, these people right now I just saw San Antonio is 85% occupied. Wow. Yeah that’s.

00:15:54:22 – 00:15:57:28
Ivan Barratt
That’s that’s one of the that’s one of the tough, tough markets right now.

00:15:57:29 – 00:16:02:22
Rod Khlief
Yeah I mean it’s going to come back but it’s it’s it’s all the new build. Just kill people.

00:16:02:22 – 00:16:04:16
Ivan Barratt
They’re staying power is the name of the game right now.

00:16:04:17 – 00:16:24:07
Rod Khlief
You know. And I used to teach a 50% expense ratio, you know across the board as an average. Forget it. It’s 6065 even sometimes. Now maybe not in your new stuff, but but definitely in, you know, any vintage stuff. Yeah. It’s high. I mean, we’re paying maintenance supervisors 28 bucks an hour. We’re at 40 now in some cases.

00:16:24:09 – 00:16:25:15
Rod Khlief
How about you?

00:16:25:18 – 00:16:28:04
Ivan Barratt
Wage increases have been across the board going up.

00:16:28:06 – 00:16:30:26
Rod Khlief
Yeah, yeah.

00:16:30:28 – 00:16:31:12
Ivan Barratt
Excuse me.

00:16:31:14 – 00:16:31:28
Rod Khlief
Yeah.

00:16:32:06 – 00:16:43:05
Ivan Barratt
Especially to find the best people. Yeah. So you’ve you’ve also had wage increases. Luckily we’ve had some really good success now on on property tax appeals.

00:16:43:06 – 00:16:43:15
Rod Khlief
Yes.

00:16:43:16 – 00:16:47:18
Ivan Barratt
Yeah that values are starting to come down from property tax reductions.

00:16:47:18 – 00:16:49:09
Rod Khlief
Although you probably didn’t get too many raises.

00:16:49:11 – 00:17:04:21
Ivan Barratt
We still got it in Indiana or the Midwest. Not nearly like you all saw it and killed here. That’s all leveled off or come down a little bit. Yeah. It’s we’re still waiting on that rent growth. You know we’ve had, we’ve had a little bit of positive rent growth. We’re seeing green shoots.

00:17:04:23 – 00:17:06:21
Rod Khlief
Mostly flatline green shoots. Yeah.

00:17:06:21 – 00:17:18:27
Ivan Barratt
We’re seeing green shoots in occupancy and we’re starting to see rent growth again. So that’s really what the industry needs is rent growth. And with construction falling off of virtual finally.

00:17:19:03 – 00:17:21:20
Rod Khlief
Yeah. Thank God. So so we’ll start to see some equilibrium.

00:17:21:21 – 00:17:24:14
Ivan Barratt
Long as you’ve got population growth job growth it’ll work itself out.

00:17:24:15 – 00:17:50:18
Rod Khlief
Yeah. Yeah for sure. You know I was just looking at an article in today’s news about, what it cost to retire in this country, state by state and all the New York, California, Massachusetts, Connecticut. You need about 65,000 approximately in income. But in the the lowest was Virginia, like 40 something. But the blue states were the highest.

00:17:50:18 – 00:17:50:25
Rod Khlief

00:17:50:26 – 00:17:51:10
Ivan Barratt
I believe.

00:17:51:10 – 00:17:54:20
Rod Khlief
That, yeah, for sure. You don’t invest in any blue states, do you?

00:17:54:26 – 00:17:57:20
Ivan Barratt
I’ve got one deal in Illinois, and I’ll be one and done.

00:17:57:21 – 00:17:57:29
Rod Khlief
Yeah.

00:17:57:29 – 00:18:01:28
Ivan Barratt
That’s it. That’s got a it’s it’s my last HUD deal.

00:18:02:00 – 00:18:02:15
Rod Khlief
Oh, wow.

00:18:02:18 – 00:18:11:13
Ivan Barratt
Okay. The interest rate on that one is about 314. Nice. And we’ve got a group buying that. And that might be the last thing I sell for a couple more years. No kidding. Yeah.

00:18:11:15 – 00:18:13:01
Rod Khlief
You do a lot of HUD.

00:18:13:04 – 00:18:20:29
Ivan Barratt
We haven’t. We? I grew up doing HUD. Right, right. I did a lot of HUD deals back in the day. Starting to look at it again, thinking 40 years, 40.

00:18:21:00 – 00:18:22:09
Rod Khlief
Year fixed financing.

00:18:22:12 – 00:18:25:18
Ivan Barratt
Almost some of them are 40, 35 to 40 depending on. Yeah.

00:18:25:18 – 00:18:42:10
Rod Khlief
Yeah I mean as much. Yeah. 35 to 40. I was going to say for you, for you to be able to get 40 pretty freaking credible. Even 35 is incredible. And there’s no term, by the way, term in commercial real estate is a balloon payment. Okay. Like you’ve got a five, ten, seven year term. It means you’re gonna have a balloon in that time frame.

00:18:42:10 – 00:18:52:21
Rod Khlief
But, but HUD doesn’t have that fully amortizing, there’s, there’s some red tape BS and reporting. You got to deal with.

00:18:52:28 – 00:18:53:10
Ivan Barratt
A ton.

00:18:53:11 – 00:18:55:16
Rod Khlief
A ton. Yeah. Thank you. Okay. Yeah. I haven’t.

00:18:55:16 – 00:19:00:05
Ivan Barratt
Done a lot of brain damage. Is it? It’s a lot of brain damage. In certain situations, the juice is worth the squeeze.

00:19:00:06 – 00:19:09:12
Rod Khlief
Well, we’re thinking, you know, in our senior stuff, that’s how we’re going to refi. Is HUD nice? Yeah, I think so. I mean, I hear it can take up to a year sometimes to get to get it approved, you know.

00:19:09:13 – 00:19:14:20
Ivan Barratt
But yeah, I know some of the best bridge to HUD lenders in the country okay. Be happy to introduce them.

00:19:14:20 – 00:19:22:08
Rod Khlief
To okay. No I appreciate that. Yeah. We’ve got a pretty good one but I don’t know if they do HUD actually my partner John John’s been handling.

00:19:22:10 – 00:19:27:17
Ivan Barratt
That’s the key in that have a really good HUD originator that knows what they’re doing and knows how to get you through the process.

00:19:27:19 – 00:19:37:11
Rod Khlief
Well, I’m thinking about it. Tell me about your team. So you’ve got a great partner. What what role do you play? What role does he play? And then work your way down? I’m just curious what your team looks like.

00:19:37:12 – 00:19:48:01
Ivan Barratt
Yeah, the team’s pretty big right now. I mean, we’re built for a different market than we’re in now, right? Right. For sure. Right. In iOS parlance, on what you would call the visionary.

00:19:48:03 – 00:20:00:03
Rod Khlief
Is from the book traction. Gino Wickman. Fantastic business process to manage your business. I use it every one of my businesses. But anyway. Forgive me. I just want to let people know what you’re talking about.

00:20:00:04 – 00:20:19:24
Ivan Barratt
Oh, hey, you’re always forgiven. Rob. Yeah, I know you, man. You’re going to interrupt me at least a hundred more times. That’s all right. Yeah, it’s a conversation. Right. So I’d be what you call the visionary. I spend time on vision, a little bit of mentorship and guidance and then talking to big customers. Gotcha. Spend a lot of time talking to big customers.

00:20:19:25 – 00:20:32:12
Ivan Barratt
Okay. My partner is now chief investment officer, is overseeing the portfolio at a high level. We’re both on the investment committee. And then we’ve got a leadership team under us.

00:20:32:14 – 00:20:34:10
Rod Khlief
Of what are the.

00:20:34:13 – 00:20:43:14
Ivan Barratt
CEO, chief operating officer, CFO, 40 year guy in the business? Nice. He’s my white hair in the in the team. You know the wizard. Yeah.

00:20:43:14 – 00:20:46:25
Rod Khlief
He’s the he’s the one that’s always fearful about what’s happening.

00:20:47:00 – 00:20:49:18
Ivan Barratt
And then my, my chief business officer. Because.

00:20:49:22 – 00:20:53:18
Rod Khlief
What is that? Chief business officer. Chief administrative leave.

00:20:53:19 – 00:20:55:22
Ivan Barratt
No. Chief. Deal. Guy.

00:20:55:24 – 00:20:56:14
Rod Khlief
Oh, gotcha.

00:20:56:16 – 00:20:56:25
Ivan Barratt
Right.

00:20:56:26 – 00:20:57:02
Rod Khlief
Okay.

00:20:57:03 – 00:21:15:25
Ivan Barratt
But chief deal guy doesn’t sound as formal as chief business officer. Interesting. So he’s a junior. Me okay. He’s running the the the tip of the spear on our credit fund. Working with our lenders, overseeing sales, marketing and and customer.

00:21:15:25 – 00:21:20:26
Rod Khlief
Marketing on assets like asset levels, investors. Gotcha. Okay. All right.

00:21:20:28 – 00:21:22:20
Ivan Barratt
Takes a lot of customers to do what we do.

00:21:22:22 – 00:21:30:28
Rod Khlief
Sure, sure. And so on. On the investor front, you have investor relations people that take calls from prospective investors, I take it.

00:21:30:29 – 00:21:31:15
Ivan Barratt
Correct.

00:21:31:16 – 00:21:31:29
Rod Khlief
What does that.

00:21:31:29 – 00:21:51:02
Ivan Barratt
Look like? It’s a whole nother business now, right? It’s got sales, marketing and customer service. Right. My chief business officer oversees that with my vision on top. But we’ve got, let’s see, five sales guys, a few folks, a few folks in customer service. Wow. We’ve got a marketing team.

00:21:51:04 – 00:21:54:28
Rod Khlief
Guys taking investor calls. Holy cow. Buddy, you sound like Grant Cardone.

00:21:55:01 – 00:22:01:19
Ivan Barratt
Yeah, we got an Aria guy. Well, you know, I learned a lot from him. There’s there was I. I have to give Grant a little credit.

00:22:01:20 – 00:22:02:14
Rod Khlief
Oh he’s.

00:22:02:16 – 00:22:14:20
Ivan Barratt
He’s because he was the first one to indicate to me that, hey, I could just go out and do this direct and not be beholden to the institutions and the private equity firms. Right. Right. And I could I could use this new playing field.

00:22:14:22 – 00:22:19:12
Rod Khlief
Says he’s raised a billion. I don’t know if it’s accurate or not, but I wouldn’t doubt it. Maybe more than that, actually.

00:22:19:13 – 00:22:20:24
Ivan Barratt
He’s he’s probably up there somewhere.

00:22:20:25 – 00:22:23:09
Rod Khlief
Yeah. My students, my warriors have raised billions by.

00:22:23:17 – 00:22:34:03
Ivan Barratt
We got, we got a, you know, one team is just working with wealth managers. Gotcha. And making sure that the infrastructure is in place to service them. That’s where it can be.

00:22:34:09 – 00:22:35:20
Rod Khlief
Friendly offices, things like that.

00:22:35:21 – 00:22:36:20
Ivan Barratt
No private equity?

00:22:36:21 – 00:22:37:10
Rod Khlief
No, no.

00:22:37:17 – 00:22:39:04
Ivan Barratt
Lots of family offices.

00:22:39:05 – 00:22:39:22
Rod Khlief
Family offices.

00:22:39:23 – 00:23:01:21
Ivan Barratt
Okay. And, you know, somebody was just asking me this the other day. They’re like, well, you’re all retail, right? And they said it kind of condescendingly, you know, with a little condescension. And I said, yeah, that’s true. Now, some of those retail investors are worth 500 million, but it’s still a retail sale. Yeah. They’re not institutions.

00:23:01:24 – 00:23:24:23
Ivan Barratt
They’ve got a different kind of team. They look at things differently. They’re more interested in the partnership, and they just operate differently. Right. So it’s it’s all still retail. And that’s that’s one of the key things I figured out. Selling to wealth managers. They want the infrastructure. They want the compliance. They want the data. You’ve got to be equipped to handle them and not make any mistakes.

00:23:24:28 – 00:23:30:29
Rod Khlief
They aren’t interested. Typical in your vertically integrated and fairly geographically specific usually as well, but.

00:23:31:00 – 00:23:38:00
Ivan Barratt
In a in a host of other things. And they’re all little different. Right. But it’s still a retail sale. It’s still more B to C.

00:23:38:07 – 00:23:43:02
Rod Khlief
Gotcha than it is. Interesting that you define it that way. Interesting. I wouldn’t think it would. I wouldn’t have thought.

00:23:43:02 – 00:23:44:09
Ivan Barratt
That it’s still more B2C.

00:23:44:11 – 00:23:44:26
Rod Khlief
Interesting.

00:23:44:27 – 00:23:54:08
Ivan Barratt
Okay. You’ve got to sell the firm that you can handle this, but then you’ve got to sell those individual advisors that their clients money. Yeah. Is, I mean, I’d.

00:23:54:09 – 00:24:08:27
Rod Khlief
Be in the I think I, you know, I’ve raised well over 100 million, I believe and and none, none from, you know, family offices, private equity any none of that. It’s all been retail investors, you know, just from reach from the podcast.

00:24:09:03 – 00:24:11:27
Ivan Barratt
The bigger the check, the bigger the strings, right?

00:24:11:28 – 00:24:20:28
Rod Khlief
Yeah. Of course. And some of some of them because of onerous to, you know, the, you know, some of the, some of the metrics that they put in place. And what happens if you don’t meet those metrics and things of that nature.

00:24:21:02 – 00:24:23:25
Ivan Barratt
There’s a lot of that going on. Bigger the bigger the check, the bigger the strings.

00:24:23:26 – 00:24:39:10
Rod Khlief
Yeah yeah, yeah. Interesting. So do you see, I’m sorry, just to digress for a minute. So we’re talking about your teams. You got to see this team digress. Yeah, yeah. It’s true. It happens occasionally. So you were talking about the the team. And and you’ve got a property management division, obviously. So that’s.

00:24:39:10 – 00:24:40:10
Ivan Barratt
A whole separate business.

00:24:40:11 – 00:24:45:27
Rod Khlief
The whole separate team. And, you have a construction as well, I’m sure. Yes.

00:24:45:29 – 00:24:49:26
Ivan Barratt
Only what we would call project management. Okay. So project managers.

00:24:49:27 – 00:24:52:18
Rod Khlief
Bring in vendors. You don’t you don’t do the work. You don’t hire the people.

00:24:52:19 – 00:24:53:20
Ivan Barratt
We are the brain.

00:24:53:23 – 00:24:54:06
Rod Khlief
Gotcha.

00:24:54:07 – 00:25:12:15
Ivan Barratt
We also have specialized guys that will travel and do light renovations. They’ll move around for HVAC work so that we’re not replacing things. We’re repairing them whenever we can. Write appliances has been a big one. Now, how do we repair those appliances? Where a few years ago, we might just throw them out and buy a new one.

00:25:12:16 – 00:25:17:22
Ivan Barratt
Right. That’s kind of changed. And then some project management.

00:25:17:25 – 00:25:18:15
Rod Khlief
On the.

00:25:18:17 – 00:25:24:05
Ivan Barratt
Which is just your, you’re basically your in-house geek. Got it. You’re still hiring subs right.

00:25:24:06 – 00:25:32:09
Rod Khlief
But you got somebody watching over them paying attention to what they’re doing, paying attention to the timelines, paying attention to the pricing and all that business.

00:25:32:10 – 00:25:37:23
Ivan Barratt
And not paying an outside GC a big profit margin for me. Yeah. Of course. Exactly.

00:25:37:25 – 00:25:56:17
Rod Khlief
Well, back to to to the digress. You see, Grant put his whole deposition online. Did you see that? I, I watched a little bit of it. Absolutely. I pulled it for doing that. Guy’s got bigger cajones than him and Trump right there together. But, yeah, I applaud him for I love the transparency. Honestly. I hope he’s successful.

00:25:56:19 – 00:26:18:19
Rod Khlief
You know, I’m a little worried about it because the very technical. But, but yeah, I applaud him as well I loved it. So back to the pain. Sure. Let’s let’s let’s let’s go. Yeah. You know, you know, I had a, you know, I had a nefarious ex-partner that I dealt with. And, you know, that’s that was really ugly and caused a lot of pain for a lot of investors and so on and so forth.

00:26:18:19 – 00:26:41:02
Rod Khlief
But, you know, that notwithstanding the, you know, economic conditions with the expense ratios going up and rents flatlined or even going down, and in some cities like San Antonio race to the bottom with rents. What’s happening in your portfolio? Well, we felt all those all those same things. Right. Luckily, like you were mentioning earlier, the Midwest did her job a little bit.

00:26:41:04 – 00:26:56:10
Rod Khlief
She didn’t boom. So she didn’t bust. That was the same as oh eight and nine and Midwest you know coasted right along. Yeah. So I would say that if we were in some of the other markets that I might have wanted to go in, that my partner talked me out of, I wanted to go to Denver. Oh, yeah.

00:26:56:11 – 00:27:14:20
Rod Khlief
You know, Denver’s a train wreck now. Is it really? We didn’t know that. I didn’t know that. You know, that’s my old backyard. Well, you know, I talked to I talked to a lot of real estate CEOs on a on a regular basis. There are so many guys right now that have residents that have 40, 50, $60,000 in back, do rents and penalties.

00:27:14:25 – 00:27:35:10
Rod Khlief
Wow. And the judge is saying write them a check to move them out. No shit. Yeah. Oh, good. But back to my liberal judges. God help us. So we’re we’re in a similar boat to a lot of folks. You know, we we killed it for a long time. The deals that I did in 22, 23 overpaid early 24.

00:27:35:12 – 00:27:54:07
Rod Khlief
We’ve already told our investors our goal there is to get return of capital and maybe a little bit more than that. Right. But the goal is to just not lose. So just I want to I want to I want to push put home what you just said because same for us. Anything bought in 22 and 23 and 24.

00:27:54:09 – 00:28:13:11
Rod Khlief
Investors should be thrilled just to get their money back because everybody overpaid. You overpaid, I overpaid. It just is what it is. We didn’t expect nobody expected the rates to have that many rate bumps. And, well, we could have handled rates if we didn’t have a supply wave. Yeah that too. And and insurance rising and wages and all the little things that happened.

00:28:13:12 – 00:28:32:14
Rod Khlief
The supply wave really set back the ability to grow earnings. Right. Right. If I can’t grow earnings and cap rates are up I’ve got a real problem. Yeah. And that’s that’s I can grow my way out of that and return capital. And that’s the key is to return the capital. Yeah. So that’s our goal as well. I just don’t don’t want anybody to lose their capital.

00:28:32:15 – 00:28:50:03
Rod Khlief
But I’ve been on webinars with our our investors. You know that’s the the CEO. That’s another job I do as visionaries. That’s the no fun. I’ve got to get up in front of their and and and take the shots. So we’ve done live webinars. Ask us anything you want. Right. Same. But here here’s the goal is to get capital back.

00:28:50:04 – 00:29:04:26
Rod Khlief
I haven’t sunk a ship yet. Right. Don’t plan on it this time. Yeah. Yeah. And fast forward to 2025. It is maybe even better from a buying opportunity now than I even saw coming out of the GFC.

00:29:04:29 – 00:29:17:08
Rod Khlief
I agree, I agree. GFC great financial crisis. Or is that what you’re calling? Okay. Yeah. Yeah. I mean, obviously everybody knows I lost 50 million in that debacle. But, no, I, I.

00:29:17:13 – 00:29:38:16
Rod Khlief
Think the buying opportunity in our space, of course, it was single family back then. Sure. What multifamily did. Okay. I mean, back when I lost everything, it was my 800 houses that pulled me down my apartment, pulled back about 11%. If family didn’t really have a GFC, had about 11% pullback, but I would have still had those collateralized across collateralized.

00:29:38:18 – 00:29:58:27
Rod Khlief
Brilliant. I’m saving 50 basis points, half a percent interest. And you know so I lost everything but but but but think about this. Think about if if if you had capital to deploy at during the resolution trust crisis. But. Oh yeah. Right. Or or the SNL I’d have a bigger jet than you do right now. Okay. I’d be on the back of my three tiny plane.

00:29:58:28 – 00:30:16:18
Rod Khlief
Okay. Or 2008. You know, if you had been able to scoop up a lot of assets. My God, people made a ton back for the first time in my career. I’m able to raise capital and deploy into a deep, deep correction and I. And so and I think it’s going to get worse before it gets better, buddy, I really do.

00:30:16:19 – 00:30:38:16
Rod Khlief
I think I think next year is going to be insane for that. Well, my warning for the audience would be don’t don’t think, don’t wait till the dust settles because then the best deals are gone. Right. And I also think that they could keep going down, in which case I will keep buying because my whole period is, you know, 3 to 7 years when you can buy for the debt or you can buy for 80% of what it costs to build.

00:30:38:22 – 00:30:59:25
Rod Khlief
I mean. Hello. I think it’s going to last longer, but it could stop. What could any day. It could. But you told me there wasn’t a lot of competition yet. And I’ve seen articles about supposed funds being put together. Competition is going to move back in. Yeah. When the AI bubble bursts. Right. That’ll drive rates down. Oh, let’s.

00:30:59:27 – 00:31:19:20
Rod Khlief
And everybody is going to wake up sooner or later to the fact that there’s not much supply being built. Right. And so we are going to see rent growth again. We’re just getting through this distortion. It’s coming. So if you look at it for decades, we did 2 to 4.5% a year. And there was a couple of years there where it was like 30%.

00:31:19:21 – 00:31:40:21
Rod Khlief
Tampa went up 30% when it hits, right? Yeah. Rents go to the moon. Right. A bunch of people enter the market thinking that’s the norm. And so we’re just dealing with that huge distortion. And that could change tomorrow. I don’t think it will. I think there’s still more time to buy. Yeah. But I can’t wait for it to go to $0.70 if I can buy it at $0.80.

00:31:40:23 – 00:31:57:22
Rod Khlief
Agreed. No, I agree, I agree. You can never time the bottom. You can never time the bottom. You’ll miss it. Yeah, you’ll miss it. Exactly. No, I agree completely. Let’s talk about. I mean, just because it’s fun. Let’s talk about the potential AI bubble. Have you been tracking the circular flow of money between these companies? You have a lot.

00:31:57:25 – 00:32:17:25
Rod Khlief
Are you watching? Are you following Steve Eisman yet? Steve Eisman show? No. It’s one of the guys from the Big Short. Okay. Oh. Oh. No kidding. He’s got a great podcast, and he so good at calling BS, right? And he goes through the circular financing on this stuff. And there’s another guy, Tom Hayes, who’s in the hedge fund industry who watches these semiconductor cycles.

00:32:17:26 – 00:32:35:22
Rod Khlief
Right. And this stuff, they just they build all this stuff thinking this is the demand is going to come and then it doesn’t come. We saw this in.com. We saw it with Worldcom and all the fiber optic stuff. Worldcom. Haven’t heard that name in a long time. We saw it with all the fiber optics that got built. That changed.

00:32:35:23 – 00:32:56:13
Rod Khlief
Changed the landscape? Yeah, well, for sure. But the investors that went in lost their freaking shirts. I think it’s going to happen. The same thing happened in the railroads. Really? Oh, yeah. Oh, wow. Yeah. Railroads changed us forever. Right. But they built too many railroads too many. And all of a sudden, investors thought that railroads were a win win, no matter what the price.

00:32:56:16 – 00:33:17:23
Rod Khlief
And a bunch of people lost their shirts. And this happens over and over and over again. Yeah. And when guys are borrowing at 15%. Yeah. To make these deals work. Yeah. And to get capital. Something’s changing. Yeah. They’re shouting see? Did you see Elon’s text on Sunday night? No. Oh, it’s so good, man. Why? What do you say?

00:33:17:25 – 00:33:42:27
Rod Khlief
He said there’s at least, like, 200 data. Nio clouds that are going to that are going to die. He said Guppy level death. He said all the guppies are gonna die. No, kid. Maybe a couple will survive. Wow. But the access to capital for these compute companies. Is drying up really quickly. Interesting. And you’re seeing the concern in the ten year treasury, you know, went up to 535.

00:33:43:00 – 00:34:08:22
Rod Khlief
Wow. Today it’s at five. It dropped really quickly. And when it drops, that means more people are getting nervous and going risk on. And you’re seeing capital flight back into treasuries. Treasuries when everything’s going great. And I can treasuries at right now ten years at 500 today. 500. Oh yeah. Wow. But it’s down 35 bits in a short amount of time.

00:34:08:23 – 00:34:28:27
Rod Khlief
Well, short amount of time is at the top. Who knows? But it’s pretty good return. The the bubble could keep ripping for a while. Wow. We’ll see. It’s going to change. AI is going to change us all. It’s gonna change. That’s a given. I mean, I mean, I’m seeing it in so many aspects of my business. You watch all in.

00:34:29:00 – 00:34:48:13
Rod Khlief
Oh, you know, that’s the one I was just told about. I just watched my first episode. Yeah, I liked it. I love what Friedberg says about this. He just draws all these parallels there, science guy. He draws all these parallels to how this technology, at first, all this value accrues to these big companies, right? The anthropic and the open AI’s.

00:34:48:18 – 00:35:06:16
Rod Khlief
Eventually all that’s going to drop to to maybe not zero, but the price, the cost of intelligence is going to get really cheap. Yeah. Matt could tell us all about it with open claw, right? Yeah. You know, he’s got he’s probably got, you know, servers running his own model. He’s not trying to cure cancer. So he doesn’t he doesn’t need anthropic.

00:35:06:19 – 00:35:27:17
Rod Khlief
Latest model. Yeah. So when, when that ship, you know, hits some choppy waters, we’re going to see some interesting things happen and that will drive down rates. Not calling it tomorrow. Interesting. That’s something. We’ll see. Yeah, I, I mean, you know, there’s a lot of talk about that having a impact on the stock market in a big way.

00:35:27:21 – 00:35:52:08
Rod Khlief
Dude, everybody’s been killing it. Every CEO I know is not in real estate is living large. They’ve killed it, right? You know, somebody say that forever. I saw somebody say that every time after the midterms. The stock market rallies. Every time. Yeah, there’s a lot of that talk. Yeah. Yeah. And somebody said, you know, who’s that? Fisher. You know Fisher, the guy that in Miami and and he said that every time after mid terms the stock market rallies.

00:35:52:08 – 00:36:12:11
Rod Khlief
But but then there’s a lot of talk that there’s going to be a serious correction. Nobody knows if we’re in 99 or 4 in 2000. It’s so hard to tell. This thing could rip again. It could go up another 40% before it comes crashing down. Yeah. Yeah. Who knows? Yeah. I’ve had I’ve had economists on the show, Harry dent, and, you know, of course, they’ve been doom and gloom in forever.

00:36:12:12 – 00:36:32:13
Rod Khlief
Well, Harry’s a perma bear. He’s gonna he’s gonna he’s gonna he’s going to be a right eventually. But I will say this in his defense, I, I went to Vancouver to see him speak in 2006, and he said, we’re a crash is coming right now. It’s it’s right around the corner. If I had listened, I might not have lost $50 million, but was you forgot rod was.

00:36:32:15 – 00:36:48:21
Rod Khlief
Harry was saying that from 1980. Yeah. You’re probably every year. That was the first time I was exposed to him. So I, you know, I thought he was a sage when it actually crashed in eight nine. But my favorite saying there is bears are right about once a decade. Bulls make money. Bulls make money. Okay. Yeah. That’s good I like that, but I, I listen to the bears too.

00:36:48:22 – 00:37:06:28
Rod Khlief
And the bears getting louder right now. Yeah. Oh, yeah. I don’t think it’s just my algorithm on YouTube. The bear seems to be getting louder. I, I mean, it’s definitely my algorithm, man. I’m it’s like I’m, I’m, I think I’m stockpiling food and. Well, you’re down here in Florida. You know, you got a different situation. Right, right. So back to pain again.

00:37:07:01 – 00:37:25:21
Rod Khlief
I know you’re buying brand new stuff that’s coming out of the ground right now. We’re already out of the ground at a discount. Have you bought from any existing operators? Because there’s so much pain out there right now? Yeah, we’ve seen a couple of those deals. So in addition to builder developers that have to sell no matter what and take the loss, right.

00:37:25:28 – 00:37:52:02
Rod Khlief
We’re starting to see some syndicator deals come back around. So, for example, we’re buying one built in 2020. Nice. In 2022, it was bought for 275,000 a unit. Wow. We’re under contract to close here November 15th. I want to say somewhere right in there. Yeah. 208 A door. 208 down from 275. Can you. Well, you can speak about where that is, right?

00:37:52:04 – 00:38:13:11
Rod Khlief
That’s way below construction cost. That’s at least 20% below what it would cost to rebuild that asset. Build it. Yeah. There are townhomes with attached garages. Direct direct entry access. Where? Where? Down in the southeast. In the Carolinas. Carolinas. I love that model. Townhouses with garages. I mean, we like to have that mix in our portfolio. There’s a lot of demand for that.

00:38:13:12 – 00:38:28:19
Rod Khlief
A lot of people don’t like to have people living above, below you and well, and in that, in that market rod, it’s double to buy a house right now. That’s the other thing. That’s the thing, guys. You always want to see disparity between the what you’re paying per unit and what the median home price is. Otherwise they’ll go buy.

00:38:28:25 – 00:38:46:23
Rod Khlief
And so when we do a presentation to our investors, we always show that disparity between median home price and the price per unit. And then the other thing that you look at is, you know, wherever you want to take the rents, ideally you want to see the median income to be three times that rental amount. That’s what we like about three x.

00:38:47:00 – 00:39:05:09
Rod Khlief
Yeah. So if it’s if it’s anything less than that 33% you’ve got room to raise. You bought this from a syndicator. They got the got the direction of the bank okay. You know okay. Yeah. He’s had to capitulate. Just, you know, paid floating rate debt. The bank. Take a look. It. I don’t think the bank will take a loss on that.

00:39:05:09 – 00:39:31:11
Rod Khlief
I think they’re right around being made whole. So, unfortunately, all those investors are out. But the. But the best equities gone. Gone poof for sure. That’s a shame. 43% supply. Dump on that market 43% more supply was dumped on that market from about the time he bought it. And that’s that’s what killed him. And now to fast forward to today, there’s no new supply for the next five years.

00:39:31:11 – 00:39:56:14
Rod Khlief
We’ve looked at all the wow. The planning offices, everything entitled comp plan. We’re watching all that stuff, right. And it’s one of the fastest MSAs in the country from a growth standpoint. He just can’t hang on. What? How many units? That one’s a 120. So that’s small ones. Typically smaller than I like to buy. Yeah, but it’s right down the street from 340 units I closed on earlier this month.

00:39:56:15 – 00:40:16:19
Rod Khlief
So it’s a little add on for us. Nice, nice. And, and so it was the supply that got dumped on this guy, which caused him to implode. Yeah. I mean, it’s like every town when they’re thinking that it was just gonna work itself out, okay. And so we we like that market where it’s just now starting to turn.

00:40:16:21 – 00:40:40:09
Rod Khlief
No, it’s perfect timing. Hockey stick. So, so, let’s talk about I. You stuck with multifamily, period. And, you know, I’m become an opportunist. I got two strategies now. Okay. Go ahead. We do a credit fund now to talk about that. So we we buy high yield debt and we loan pref equity to developers and owners of real estate.

00:40:40:12 – 00:40:58:08
Rod Khlief
Really as a as it is a fund you raised money for to do this my first evergreen fund. Interesting. Yeah. Yeah. And so so so one more time. So you you provide private equity. Preferred equity. Preferred equity. Yep. So it’s got it’s got a monthly. It’s got to be right behind the primary debt. Exactly. It’s got a monthly payment.

00:40:58:11 – 00:41:16:13
Rod Khlief
With some upside on the back end. Okay. I have the right to to step in if if there’s a default and and your definition of defaults. Probably fairly generous. We don’t want to. We don’t want to step in. We want to work with good operators. Okay. We want to just be paid back. We don’t we don’t want to take over problems.

00:41:16:13 – 00:41:35:22
Rod Khlief
Right, right. But you I’m sure, just like you need to like any preferred equity, you’ve got some stuff in there to protect yourself. We’ve got to underwrite the collateral. It’s got to be good collateral. And we we want to work with good operators, but it’s a it’s an adjacent strategy to multifamily that I can use my multifamily core competency of knowing what a good deal looks like and the underwriting and the management of it.

00:41:35:23 – 00:42:01:12
Rod Khlief
Okay. To provide a different strategy to my investors, some interest, a little more countercyclical, probably a little more stable. Yeah, a little more stable. A little more, maybe even easier to understand. That’s the goal. Yeah. Yeah. Higher margin of safety. Right. Because as as I’ve been at this now for 15 years and higher margin safety guys. So what he’s talking about with preferred equity, if you don’t understand what that means is, you know, it’s all the order of payback.

00:42:01:14 – 00:42:22:18
Rod Khlief
Okay. And like, like this example where he’s buying this asset for the debt basically in this case the preferred equity, we’d be screwed in that case. But the typically preferred equity gets paid back right after the primary debt. So it’s much safer than typical investor dollars that you’re going to bring in from limited partners, you know, at 100 K a pop or whatever.

00:42:22:19 – 00:42:40:28
Rod Khlief
So you’ve got pref, it’s got a coupon payment, right. And maybe they’ll make 12%. But they get paid first. They get paid first. So it’s much safer than the typical investor that’ll step into a multifamily deal. That would be common equity. Right. Right. Where they might get less cash flow on the way, but they get the big upside on the back end.

00:42:40:29 – 00:43:01:07
Rod Khlief
Correct. If it works. Correct. Different risk profiles. Correct. And we’ve got more and more investors, that have made their wealth, and now they just want to live off the income and protect it. Right. Right. Yeah. And that’s that’s that’s that’s as much of a challenge as making it sometimes. Sure. So you’ve got that. And I was starting to talk about other asset classes.

00:43:01:07 – 00:43:16:22
Rod Khlief
What else are you doing? We’ve we’ve done a little bit of experimentation and development with some good sponsors. Okay. Our investors asked for some development deals. We’ve done a little bit of that. You’re building something right now. We’ve got three. Wow. Where? Yeah. And I think we I think we’ve got it. Got into it a little early. Tell me what you’re doing.

00:43:16:25 – 00:43:37:11
Rod Khlief
We’re in Bloomington, Indiana. We’re in Pittsburgh. Pittsburgh. And we’re we’re in our hometown of Indianapolis. Okay. Yeah. Okay. I have an Alf in Pittsburgh. Wouldn’t have been my first choice, but, interest in a good market. Has it been a good market? Now, we might have gotten shovels in the dirt a little early, so we’ll probably have to hold those in extra year, which lowers the IRR a little bit.

00:43:37:12 – 00:43:53:28
Rod Khlief
You know, more than we’d like. The IRR is the total return on the deal. It’s called the internal rate of return. Just sort of lower that a little bit. Okay. So so you’re doing some development as well. These are these larger assets. Are they what what size do these things. Institutional class A 2 to 300 unit. Gotcha.

00:43:53:29 – 00:44:18:10
Rod Khlief
Apartment buildings. Yeah. Still HUD financing are still an inch wide and a mile deep in multifamily HUD or all construction financed. Yeah, with. With what? You lenders. What do you think your takeout is going to be? These are merchant development deals. This is the goal of the deal is to sell it and do two and two times mock or multiple of invested capital back to the investors in a in a three year period.

00:44:18:10 – 00:44:35:13
Rod Khlief
If we can do it, sell it back to the investors. No no no. Sell it. A merchant build means you’re building it. You’re leasing it up, but your aim is as soon as it’s stabilized and looking the best it’s ever going to look full of tenants. You sell it interesting. You sell it to the to the institutions that are looking for.

00:44:35:14 – 00:44:54:23
Rod Khlief
Oh the big. Yeah. The big players that want the want the more stabilized. Yeah. The pensions enterprise or the. Yeah, exactly. Okay. Got it. Interesting. Okay. What do you think about some of these other asset classes? I mean, you stuck with your wheelhouse, obviously very successfully. Now, of course, you had your ass handed to you just like I and everybody else in the business.

00:44:54:28 – 00:45:17:03
Rod Khlief
But do you have any interest in ever pursuing senior housing, for example? Well, never say never. Okay. Right. Right. And that doesn’t mean that I don’t like those other asset classes or find them interesting. Right? So I was on a show with a couple of young guys that are real estate guys. They said, hey, what’s some of the best investing advice you’ve ever got, you’ve ever received?

00:45:17:04 – 00:45:45:24
Rod Khlief
Okay. And I said, I was told a long time ago that real estate, stocks, gold, seniors, housing, industrial, retail, none of those on the on their own are good investments. It’s how good of an investor are you. Right. How well do you know your real said. Well how well do I know my craft. How, how disciplined am I on my investment strategy.

00:45:45:26 – 00:46:05:26
Rod Khlief
Right. Right. And so as a fund manager, investment manager I have to be very careful with the strategies I get into because I, like you, love shiny objects. Oh, yeah. Oh, yeah. Oh, good. I love all kinds of stuff. Yeah. Right. So I have to put my proverbial blinders on. Yeah. Well, you’re better at it, obviously, than I am.

00:46:05:26 – 00:46:21:15
Rod Khlief
But, you know, it’s funny. You know, I call my failures seminars. You’ve heard me say that I called paying tuition, so. Yeah, I got that from Tony Robbins. But, you know, I don’t even know if you know this, that I’ve built 30 companies so far in my career. Several worth tens of millions of dollars to right now are.

00:46:21:15 – 00:46:45:18
Rod Khlief
But most were spectacular flaming seminars. We fail our way to success. But I guess if if I had to pick one right now or two, I think what you’re doing in senior housing is no brainer. Huge headwinds. I mean, it was ten 10,000 pounds. What I said headwinds I meant tailwinds tailwinds. Yeah yeah yeah. Tailwinds. My god. The other one I would pick right now would probably be industrial.

00:46:45:20 – 00:47:10:12
Rod Khlief
Oh yeah. No. So I’m teaching industrial flex now to my warriors I’m teaching senior housing. My Warriors I have a senior housing bootcamp coming up May 14th. And by do I really say May. Oh, shit. Oh, shit. Oh, man. Flash it at the bottom of the screen. November. I need more of my May. What the hell? November 14th.

00:47:10:14 – 00:47:38:07
Rod Khlief
Good Lord, I think I’ve said that publicly too. Good lord. Anyway. November 14th is my senior housing boot camp. It’s a whopping $17. So tell me your freaking excuse. If you’re interested, it’s, by senior.com. Okay. No excuses. And you get my software for evaluating senior housing. But anyway. And I’m super excited about that one man. 10,000 people a day turning 80 every single freaking day for the next couple of decades.

00:47:38:07 – 00:47:54:11
Rod Khlief
And then industrial. Anybody that thinks I’m just going to crumble. Oh, please. Is out of their mind. Please. I mean, I know I’ve got I’ve got warriors that own thousands of senior housing units already, but also a ton of industrial flex that they’ve built in or bought. And it’s a great asset class. Love that asset class. I wish there were 3 or 4 of me.

00:47:54:13 – 00:48:11:01
Rod Khlief
I mean, you just great at putting a team together. I need to be better at that so I can go after some of these other things more aggressively. But loving the senior housing. We’re not we’re buying we’re closing our eighth facility tomorrow, actually. So is that beds then? You guys measure that in beds. Units. Still units. It’s rooms.

00:48:11:03 – 00:48:34:19
Rod Khlief
Now here’s the thing. How many rooms you up to, man? I don’t even know. But but but let me say this. So many to build to build is 250 to 350,000 a unit. Okay. Closer to 350 than 250, in many cases. Wow. We paid 40 a unit for this six pack we bought in Texas. Okay, yeah, we’re paying 80 a unit for this one.

00:48:34:19 – 00:48:53:14
Rod Khlief
We’re closing on tomorrow. And so, I mean, the the the numbers are insane because and and let me see, the numbers are so good that on the pro forma we proforma it at 85% occupied when our operators at 97% occupied. It would have looked ridiculous if we’d have put 95 or 97 in there. That’s how good the deal was.

00:48:53:22 – 00:49:12:26
Rod Khlief
But yeah, those are all I raised all the money for those. But and I think what’s good about that business. Correct me if I’m wrong but similar to multifamily. The good news is there’s always somebody somewhere who screwed it up. Oh sure, somebody screwed it up. But Covid killed a lot of these facilities as well. The one in Pittsburgh got killed by Covid.

00:49:12:26 – 00:49:30:03
Rod Khlief
It was empty when we bought it. Wow. But it’s all based on the operators. Well, now I’m not doing the senior care. I teach people to do the real estate piece and hire a line or partner for the for the senior. Yeah, that’s a whole nother. Yeah. And that’s all other conversation management look easy. Well, yes it does.

00:49:30:06 – 00:49:46:24
Rod Khlief
And you know that there are a lot of horrible property management companies out there. I told you, unfortunately, I’m suing one right now. They’re old friends of mine, which is really horrible, but, but it’s the same thing in this business. There’s good operators and there’s bad operators. I just went to the Nick conference. That’s the senior housing trade group.

00:49:46:24 – 00:50:04:23
Rod Khlief
Don’t ask me what the NSC stands for, but it’s. There were 4000 people there. This was a Super Bowl conference. It’s everything for senior housing, I guess my third one that I’ve gone to and I say the 4000 people there, and all I did was interview operators for two days, literally, I think close to 50 that I sat with.

00:50:04:26 – 00:50:27:09
Rod Khlief
I had to get my little transcribed note thing and, and have it take notes. And it’s been know, just organizing it’s been a challenge. But you know, the key is to find a great operator in the business. It usually is. Yeah. It’s the same thing with multifamily and you’re vertically integrated. You do your own operations. But most people, you know that those are the honestly, the best operators in the business are the ones that are vertically integrated.

00:50:27:09 – 00:50:29:10
Ivan Barratt
So freaking hard. But the juice is worth the squeeze.

00:50:29:10 – 00:50:53:20
Rod Khlief
Yeah, it really is. And it is so freaking hard. So you’ve got three kids. Yeah, you’ve got a bride that puts up with you most of the time. Yeah. Okay. How do you first of all, how do you balance that if you do. And, and give them the attention they deserve. Because I spend a lot of time on this with my coaching, Susan, my warriors, my greatest regret in life is I used to.

00:50:53:22 – 00:51:04:25
Rod Khlief
By the way, my old house is right across the bay here. It’s about, I pray, about a $12 million mansion right on the beach there that my ex-wife got. But but but I God’s got a sense of humor. I can see it right off my backyard.

00:51:04:27 – 00:51:05:25
Ivan Barratt
He sure does.

00:51:06:00 – 00:51:19:28
Rod Khlief
But, you know, I’d come home to that place and I’d play with my kids, but I wasn’t there mentally, I wasn’t there, I wasn’t presence. My greatest regret in life, I mean, I kids love me. They call me every day, but they say I’m a great dad, but I have a regret from that. How do you balance that?

00:51:19:29 – 00:51:38:28
Ivan Barratt
It’s tough, man, I I’ve come to the conclusion that at least for me, there really is no balance. There’s there’s these seasons, right? Like, right now I’m in a season and I’ve had to say, hey, babe. Melissa, I’m going to have to work more right now than I usually would have to because of the nature of the opportunity.

00:51:38:29 – 00:51:40:02
Rod Khlief
I’ve done the challenges.

00:51:40:02 – 00:52:04:17
Ivan Barratt
Yeah. I mean, my sales guys are great, but they need my help closing CEOs, business owners, big investors. I’m on the road more doing that. I’m doing more meetings. And I’m still doing my best to squeeze in that time. So try to get home at a decent time. Weekends, I’m usually with my kids. Oh, good. We travel, we’d love to take trips, and I do one on one trips with each of them whenever I can.

00:52:04:24 – 00:52:08:12
Rod Khlief
That’s so good. I did that with mine, too. And they. They still remember that. That’s so good.

00:52:08:13 – 00:52:12:28
Ivan Barratt
And, you know, my son out 15, he’s he’s got his own life. Well.

00:52:12:28 – 00:52:15:16
Rod Khlief
He discovered girls and he’s got his phone, so. Yeah. You may not see.

00:52:15:16 – 00:52:16:17
Ivan Barratt
He does not have a phone yet.

00:52:16:19 – 00:52:19:26
Rod Khlief
Oh, no shit. No shit. You’re a 15 year old. Doesn’t have.

00:52:19:26 – 00:52:29:14
Ivan Barratt
A he’s got an I watch, he can text his buddies. Wow. And we’re we’re very close. Wow. But when he gets one, he will have no social media. Man. We are real serious about that. Yeah.

00:52:29:14 – 00:52:32:24
Rod Khlief
What’s that movie about? Social media. About how onerous it is.

00:52:32:26 – 00:52:34:19
Ivan Barratt
Oh, my wife’s way deep into that stuff.

00:52:34:20 – 00:52:35:26
Rod Khlief
Yeah, there’s a movie about it.

00:52:35:26 – 00:52:42:09
Ivan Barratt
I’m glad my kids aren’t younger, man, because all, you know, so many people just gave their kids phones. Yeah, and you’re seeing it start to flip back.

00:52:42:10 – 00:52:42:18
Rod Khlief
Yeah.

00:52:42:20 – 00:53:02:17
Ivan Barratt
So. And we’re at a pretty conservative, biblical based school. So you’re seeing more parents avoid that phone? Yeah, he’ll get one soon, but it’ll be, you know, text and call only for a while. No social media. Now I keep telling him, hey, man, when you’re 18, you’re going to figure this stuff out. Like, I’ll still be here to guide you.

00:53:02:18 – 00:53:04:29
Ivan Barratt
Yeah, but, you’ll be making those decisions.

00:53:04:29 – 00:53:12:20
Rod Khlief
On buddy. I, I salute you for that. That’s that’s that’s. I’m sure you’ve had some battles over that one, but big time. Yeah. Big time. But,

00:53:12:22 – 00:53:14:14
Ivan Barratt
We’re seeing more parents circle up on it, though.

00:53:14:15 – 00:53:15:17
Rod Khlief
Oh, yeah. Okay. Yeah.

00:53:15:21 – 00:53:16:25
Ivan Barratt
That’s interesting.

00:53:16:27 – 00:53:35:08
Rod Khlief
So. Well, I love that you do one on one trips. I remember I took my daughter on a cruise and I took my son. I took my son to this fish camp in in Georgia. It’s one of these places where you could throw a rope in and catch a fish, you know, they starve the fish or whatever. And, yeah, he we still talk about how, how how much fun that was.

00:53:35:11 – 00:53:35:24
Rod Khlief
But.

00:53:35:26 – 00:53:43:15
Ivan Barratt
I, like you have a, you know, gym and home. I still I gotta hit the gym every morning. Nice. That keeps my stress level down. It keeps my energy better.

00:53:43:17 – 00:54:00:17
Rod Khlief
Yeah. For sure. And, there’s always some, you know, it’s still like, are you doing peptides or any of that stuff yet? Oh, yeah. Oh. Me too. Oh big time. Yeah, yeah. They’re awesome. Yeah, I realized I had low testosterone years ago. TRT two. Yeah. Okay. Yeah, yeah. What was it like, NAD+ or the or the a little bit of that green stack.

00:54:00:21 – 00:54:19:01
Rod Khlief
I’ve done some Wolverine. I’ve got a little supplement stack that I use. I’ve got a huge creatine table stakes. Got creatine right here in here. Got Maggie one. Yeah. You know all of that. Yeah. Yeah. You got to I mean, how old are you? I’ll be 49 next year. Jesus. I’ve got socks that have a decade on you.

00:54:19:04 – 00:54:35:13
Rod Khlief
Good lord. Okay. Wow. Yeah, yeah. So, I mean, we could. You know, tomorrow’s not a promise, but as long as I’m here, I’m gonna try my best to live life at the, you know, the fullest. Yeah. You know, I used to be able to run, and then I tore my meniscus on my leg. Don’t ever do the leg extension, man.

00:54:35:13 – 00:54:48:05
Rod Khlief
Your knees aren’t made for that kind of weight. And I popped both of them. I heard them pop, so I can’t run anymore. So I’ve got this. How much were you? How about how much weight did you have on that? Too much, too much. But do do leg press. Don’t do leg extension. I’m telling you, just trust me on this.

00:54:48:05 – 00:55:03:18
Rod Khlief
So I’ve had. I have two new knees. Oh you do. I got them two years ago. Oh, wow. And I had I got a new hip about eight and a half weeks ago. Wow. Or no, it says Wednesday, nine weeks ago. You got a new hip. Yeah. You moving around pretty good. It’s a walking the walk in the park compared to getting.

00:55:03:23 – 00:55:19:01
Rod Khlief
Wow. Well, I, I can’t run anymore. I have these gay elliptical bicycles and one in Miami and one here. It’s the gayest thing you’ve ever seen. I lose my masculinity the minute I get on it. But it’s a great workout. My my legs and my ass are hardest rocks for the first time in my life, but I can’t.

00:55:19:02 – 00:55:34:00
Rod Khlief
You got. You got to make sure you got the good one, because some of those can cause hip problems. Yeah, I got these. These were like, $3,500 apiece. They really never got the good ones. Yeah, yeah. But, yeah, it’s by the way. Give him a shout out because I’m so happy with them. Called elliptical. Elliptical as the brand.

00:55:34:00 – 00:55:48:13
Rod Khlief
But but just know this. If you’re a man, you’re going to lose your masculinity when you get on the damn thing. Because. And you know, I should wear a helmet, but that would just take the gayness to a whole nother level. I just can’t do it. And by the way, my best some of my best friends are gay, so don’t don’t give me the political correct bullshit.

00:55:48:15 – 00:56:08:22
Rod Khlief
You’re just you. Just like in the commenters fired up. I do. Yeah, I I, I create a lot of static. Well, listen, brother, this has been a hoot. By the way, if you want to reach out to Ivan, he’s a freaking rock star. It’s bam capital.com. Bam! Capital.com. And, it’s just such, such a great opportunity to see you.

00:56:08:22 – 00:56:22:20
Rod Khlief
And I’m so grateful you literally flew down here just for this, and it’s. Yeah. Just great to spend some time with you. My honor to be here, brother. It’s been too long. Yeah, yeah, it’s been way too nice to. Nice to chat for a little while here. Thank you. Thank you.